As the Union Budget draws closer, Subhrakant Panda, the immediate past president of the FICCI said that the economy needs more investment in infrastructure, ease of doing business, and simplification of tax regimes.
Panda was part of a Federation of Indian Chambers of Commerce and Industry panel, which spoke exclusively with NDTV Profit about the industries' expectations from the upcoming Budget on July 23.
The panel also included Anish Shah, president of FICCI; Harsha Vardhan Agarwal, senior vice-president of FICCI; and Anant Goenka, vice-president of FICCI.
This is the first budget of Prime Minister Narendra Modi's third term. This time, the Union government has a comfortable fiscal cushion, thanks to the RBI bonanza and improved tax collections.
However, the question remains whether the better fiscal position will meet the needs and demands of the industrial sector.
Expectations From The Budget
Harsha Vardhan Agarwal expects investments to lead to inclusive growth and, overall, propel economic growth. "Not only should employment grow, but the government should also improve skills (in the job market), which requires certain government interventions," he said, adding that several initiatives in this light have been announced by the government.
Subhrakant Panda stated that the ease of doing business, especially from the manufacturing sector's point of view, needs to improve and needs to complement the services sector in terms of jobs. He added that the simplification of tax regimes such as TDS and TCS is also imperative. "FICCI had suggested various measures that would lead to greater simplification and do away with classification disputes," he said.
"This year, we expect another five-year vision from the current government. This includes investment in infrastructure, boosting manufacturing, employment generation, and boosting demand to raise private investment," said Anant Goenka.
Rural Consumption Distress
Consumption has been slightly lower, as it has reduced from 6.8% in FY23 to 4% in FY24, Anish Shah observed. "Yes, there are signs of rural distress; however, in the past four years, rural areas have held up pretty well."
There may be some measures that are required, but from an industry standpoint, the focus should be on long-term growth, capital formation, investment, infrastructure, making India the manufacturing hub, and reducing logistical costs, Shah said.
Curtailing Logistical Costs
Anant Goenka told NDTV Profit that investments in highways, railways, and multimodal transportation systems are already visible. "We are also seeing the simplification of GST and the tax system, which has improved the time taken for trucks carrying goods to move on the road. All these things are works in progress for improving our logistical costs."
He further added that as India moves towards renewable energy, the cost of power could also come down.
FICCI has reiterated that the 15% tax on new manufacturing units should be extended for 3–4 years, which in the past has been extended for only one year, according to Subhrakant Panda.
"When you are looking at grabbing the China+1 opportunity, you don't want to create any impedance in the decision of global boardrooms to shift to India," he said.
Review Of PLI Schemes
As the question around incentives is broader, FICCI members have discussed this among themselves and agree that there should be an economic benefit before asking the government for any incentive, Anish Shah said. The benefit has to accrue for the economy in the long term. FICCI does not expect a slew of PLI schemes like in the past, except for a few targeted ones.
He said, "Electric three-wheelers, last-mile mobility vehicles such as electric four-wheelers and cargo vehicles, etc, have seen a growth of 0–20% as an industry in the last 3–4 years and we expect it to reach 100% by 2030. By 2030, once the industry hits 100% growth, it will not need incentives anymore. This is a classic example of an industry transformed because of incentives, which reduced fuel bills and pollution as well," Shah said.
Land And Labour Reforms
There are four labour laws that are awaiting approval, which FICCI hopes gets the green light and all political parties agree to, Goenka said, as it will ensure more safety and security for the factory workers.
"We are also seeing more industrial parks that will have power available all the time and single-window clearance systems. If we can have a demarcated area, where the rules are simple and power is available with strong ETP and STP systems, that would be great. There are several such areas in the country and building more such land banks will help the industry," Goenka added.
Watch The Full Conversation Here
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